I recently offered a post that included the return comparisons for the Canadian Robo Advisors. Today we’ll take a look at how Canada’s first Robo Advisor, from Tangerine, would hold up against those ETF-focused Robo cousins. Tangerine does not often make the Robo lists, likely because they first offered index-based mutual funds instead of ETF portfolios. Tangerine now offers ETF portfolios within their online investment lineup. Let’s have a look at the Tangerine Core Portfolios vs the ‘real’ Robo Advisors.
You might start here with – what is a Robo Advisor?
And here’s the post on the Tangerine Core Portfolios.
To generalize, with a Robo Advisor you will complete an online questionnaire that will assess your goals, time horizon and risk tolerance level to then offer the most suitable portfolio. The portfolios are rebalanced and managed for you. The fees are in the range of 0.40% to 0.70% for those ETF models. Tangerine has a management expense ratio of 1.07% for their core portfolios.
Those all-in fees are 80% to 65% more cost-effective compared to the mutual fund route that is popular in Canada. While there’s more than fees to consider with respect to investment performance, fees are the most reliable indicator and the Canadian Robo Advisors simply destroy the performance of the average and typical mutual fund in Canada.
Keep in mind that humans are in the mix. At all of the Canadian Robo Advisors you have access to investment advisors. A few of the shops offer financial planning. You can get a full service offering by way of a Robo Advisor.
And for the record, I was one of those human advisors with Tangerine for over 5 years.
Tangerine vs the other Robo’s
The Tangerine portfolios, both the core and the Tangerine Global ETF Portfolios are the most plain vanilla of the Robo gang. They employ …
The other Robos will often include REITs, foreign bonds and at times, active or specialty ETFs. They are more likely to apply a weighting to developing market ETFs.
Wealthsimple even has some gold in the mix.
Yes, they have more baskets. Do more baskets equal greater returns or better risk-adjusted returns? Let’s have a look.
Here’s the original post looking at the performance of the Canadian Robo Advisors. Yes, I give away the top-performing Robo in the headline. The period is to the end of October 2021.
The above comparison is for the Balanced Growth models. That is in the range of 70% to 80% stocks with the remainder in bonds. If we look at the Core Tangerine Balanced Growth Portfolio we see returns of 8.24% annual.
Here’s where Tangerine would slide in for 5-year returns …
- Justwealth 9.54%
- Nest Wealth 9.28%
- CI Direct Investing 8.96%
- Smart Money Invest 8.88%
- Tangerine 8.2%
- Wealthsimple 8.0%
- Questwealth Portfolios 7.89%
- BMO Smartfolio 7.7%
- ModernAdvisor 7.1%*
And for 3-year returns.
- Justwealth 10.03%
- Nest Wealth 9.88%
- VirtualWealth 9.5%
- Tangerine 8.8%
- Smart Money Invest 8.55%
- RBC InvestEase 8.29%
- CI Direct Investing 8.18%
- BMO SmartFolio 8.10%
- Wealthsimple 7.85%
- Questwealth 7.81%
- Modern Advisor 7.78%
It’s about the asset allocation and the fees
The Tangerine Core Portfolios more than hold their own in the land or Robo’s. They are a wonderful option for Canadian investors who want a managed portfolio with access to human advisors. When I was at Tangerine one of my duties was to compare clients’ outside investments to the Tangerine approach. It was no comparison, at all. The Tangerine portfolios would win almost all of the time, and to a very large degree.
Moving to sensible low-fee investments could be life-changing. You might retire with considerably more in your portfolio pocket. There may be the option to retire many years earlier compared to the high-fee mutual fund route.
Money doesn’t grow on fees
Tangerine is also a great place to bank. They are Canada’s leading online bank. You can bank without fees and also have all of your accounts pay you. Tangerine has a limited time offer that will pay you 2% until April 30th.
We also use the no-fee Tangerine Cash Back Credit Card.
Our last cash back payment was $60.86, on everyday spending. Make your bank(s) pay you.
For our cash emergency fund, we use EQ Bank. Here’s my EQ Bank review. They recently increased some GIC rates.
It’s time to take a look at your investment returns and your cash savings rate.
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Consider Justwealth for RESP accounts. That is THE option in Canada.
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